Alcohol tax hike opposed by Minnesota labor

Alcohol tax hike would burden the working class most, and would cost jobs.

The axiom that “politics make strange bedfellows” is regularly proven to be true. Just as often, though, policy differences divide close friends.

That’s the position in which many of us in organized labor find ourselves as we consider the Minnesota House’s tax plan.

We worked hard for the election of candidates who pledged to increase taxes on high-income earners, in order to ensure more equitable taxation of the state’s residents. Organized labor has been proud to support Gov. Mark Dayton’s call for a new, fourth income tax tier so that the wealthiest 2 percent don’t pay a lower effective tax rate than the middle class.

The Teamsters union is in full support of the House’s inclusion of the governor’s marquee tax proposal — and of other major provisions in its bill.

But one thing sticks in our throat: the massive, 600 percent increase in the alcohol excise tax.

There are several reasons why this increase is bad policy and at fundamental odds with both DFL and labor values.

First, it represents a tax on the working class. The liquor excise tax — combined with up to five other taxes (federal excise, state gross receipts, bottle tax, and state and local sales taxes) — is extraordinarily regressive. Affluent Minnesotans can more easily afford $4 more per case of beer (or $2 more on each bottle of wine or spirits) than can middle- and lower-income Minnesotans.

We’re told it is equivalent to just 7 cents more per drink. But the liquor industry’s experience is that consumers will face at least double that cost after tax multipliers and added costs of doing business. Still small change for consumers, you say? Tell that to people having a hard time making ends meet. They don’t recall voting for Democrats on a promise to raise the price of their beer or margarita.

Second, this tax hike would hurt workers in the hospitality and liquor industries. Liquor taxes are already significantly higher in Minnesota than in all four surrounding states. An excise tax increase would seriously hurt competitiveness of retailers in border communities. An increase would reduce sales, lead to consumers trading down on brands and diminish profitability. Translation: job losses in the thousands, of which many would be good union jobs that provide great wages and benefits.

One major brewery estimates that 9,200 jobs would be lost under the Minnesota House plan. The experience of the last federal excise tax increase was the same — tens of thousands of jobs nationwide permanently lost.

Finally, union workers in the liquor trade would suffer. Our members work in wholesalers’ warehouses and drive their trucks all across the state. We are vital to the proper, professional delivery of a socially controlled and (in the case of beer and wine) perishable commodity. Declining retail sales resulting from the House’s tax increase would harm our members’ employers, leading to cost-cutting and eventual job loss.

How ironic would it be if the first DFL trifecta (governorship, Senate and House) in more than two decades were to raise a highly regressive tax on middle- and working-class voters, with the net effect of diminishing union workers? We believe DFL legislators should stick to the plan that got them elected: taxing the wealthiest Minnesotans and creating jobs.